Sellers Dilemma: It's Not What You Think

You’ve seen—or even struggled with—this sales problem before: to close more deals today, you have to keep your head down and focus on the pipeline. But to close more deals in the future, you have to keep your head up and spot new opportunities.

So which is right: head up or head down? That’s what is commonly thought of as the seller’s dilemma.

It’s a false choice. To choose either one completely at the expense of the other would hurt your business.

If all you do is chase short-term deals and low-hanging fruit, you run the risk of filling your pipeline with too many unprofitable deals at heavy discounts. That’s what happened to a client of mine in the consumer goods sector. Every sales quarter, there was a panic to meet revenue targets, so deals got made that unloaded excess inventory at fire sale prices. It was unsustainable.

On the flipside, if all you do is chase the big deals that take a long time to close, you’ll go hungry too long and starve revenue-wise. That’s what happened to a separate client of mine whose sales team spent their entire year trying to close one deal. Sure, that deal promised a five-fold return the following year when it closed. But what was paying to keep the lights on until then? And what would they do if the deal didn’t work out? That’s a terrible risk.

Head up, head down. Short term, long term. These are not choices in sales. They are a matter of balance.

To strike the right one in your business, you need to stick to the following simple, repeatable formula.

Define your distances. You need to know exactly how far you’re prepared to extend yourself in your pursuit of lucrative longer-term deals. What potential value does each one have? How long will those deals really take to close? You need precise answers to those questions, not guesses.

Two pipelines, one kind of math. Build two pipelines for your business: one that manages your current, qualified opportunities to close, and another one for turning cold leads into qualified opportunities. And here is the trick: my pipeline research shows that if it takes 100 days to convert a qualified lead to a sale, it will take you 100 days build a pipeline big enough to hit your target. So your key metric of the days you need to be working forward to (i.e., from cold lead to close) must always be two times the number of days into the future that it takes you to close a qualified opportunity.

Define the gap and close it. Working closely with a wide range of clients over many years, we’ve run the numbers at Engage and have found it takes 35% more time to convert an opportunity to a close than to convert a lead to an opportunity. This is simply because there is more to do, and more people to work with. That means you’d need to spend 35% more of your time converting your sales pipeline than on opportunity generation. That also means in a seven-hour day, you’d spend four hours converting qualifieds to close. And you’d spend three additional hours managing opportunity generation, including a range of activities, such as follow-up calls, social media, networking, relationship building and value creation.

To summarize: the seller in this scenario should be looking 200 days ahead, working four hours a day on current opportunities and three hours a day on creating new opportunities.

Take into account the outlier factor. It’s important to check-in regularly on your conversion ratios. Sometimes that is where you’ll uncover outliers. For instance, if your marketing department is working more efficiently than the industry average, you might be dealing an overabundance of highly qualified leads, thus you would be able to reduce lead generation time. Or you could be operating in a mature marketplace in which you own a dominant position. In that case, you might have to increase your lead generation time.

So stop framing your selling strategy as a dilemma! That way of thinking is precisely what keeps you stuck in a boom-bust cycle, which hinders your long-term ability to grow and accelerate sales. Instead, adopt a balanced approach with a disciplined habit of looking at your numbers. This is how you avoid the rollercoaster and keeps your business on a smooth, stead upward climb to more sales and greater profitability. In short: a Non-Stop Sales Boom!